Imagine this worst case scenario for a moment – hopefully it’s not something you have first-hand experience with. The bills are piling up on your doorstep and your creditors are knocking at the door. Unfortunately, you don’t have any money to pay off your debts. Though you seem to be at a dead end, there’s still one stop-gap measure you can use: bankruptcy.
Keep in mind, though, that there are many conditions and responsibilities associated with bankruptcy. It is only an appropriate course of action if you really are desperate to end your cycle of debt. If you’re considering it as an option, you need to be sure of the facts.
In order to be declared bankrupt, either you or your creditor could request for the Courts to make your bankruptcy order. For self-requested bankruptcy, you’ll need to fill out a couple of forms: the petition and the statement of affairs. After completion of the forms, you can pass your bankruptcy petition to your local county court. You’ll also have to pay some fees when you submit your petition.
Bankruptcy petitions made by your creditors cannot be ignored. The petition may still be processed and approved even if you refuse to cooperate or agree to the proceedings. It’s advisable to just cooperate with the creditor once a bankruptcy petition is filed against you, or try to reach a settlement before the petition is heard.
A bankrupt individual’s duties start once the bankruptcy order is made by the Courts. You’ll be told to get in touch with the Official Receiver, who’ll also be the trustee. As trustee, the Receiver will handle your financial affairs during your bankruptcy period. You’ll have to turn over your assets (anything that may be used as payment for your debts), bank statements, and account books to the Receiver. Your assets may include your home. Should it come to that, you’ll be given twelve months to find a new home. Once you are declared bankrupt, you’ll also be prohibited from using all your bank accounts and credit cards. You will also be disallowed from borrowing money, unless the lender knows that you are bankrupt. And you’re required to cooperate with the Official Receiver, who will be investigating your financial affairs and handling your assets and property. Refusal to cooperate with the receiver can get you arrested.
One year from the date your bankruptcy order was made, the Courts will discharge you from bankruptcy. You could even be discharged earlier. Your friends and family members can buy back your property for you, as long as they properly contact the Official Receiver.